Suppose That Dwight and Jim Can Either Make Salads or Grill

question 137

Multiple Choice

Suppose that Dwight and Jim can either make salads or grill steaks.Their maximum output per hour is listed in the following table.Given the same quantity of resources,at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontier (PPF) ?

• A)1 salad per 1 steak
• B)2 salads per 1 steak
• C)2.5 salads per 1 steak
• D)3 salads per 1 steak
• E)3.5 salads per 1 steak

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Definitions:

Inventory

Items held for sale in the ordinary course of business, as well as materials and components that will be used in the production of goods to be sold.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Accounts Payable

Liabilities or amounts owed by a company to its creditors for goods or services that have been delivered but not yet paid for.

Depreciation Expense

The portion of the cost of a fixed asset that is considered consumed during a specific accounting period, used to reflect wear and tear.